D-Wave reportedly raises US$21 million on heels of 2000-qubit system launch

Burnaby, B.C.-based quantum computing company D-Wave Systems Inc. has “quietly” raised US$21 million, according to a report from the Globe and Mail’s Sean Silcoff, led by previous investor Fidelity Investments and first-time investor Montreal public-sector pension investment manager PSP Investments, which oversees $117 billion in assets.

D-Wave did not announce the funding and would not confirm the names of the investors to Silcoff, who cites “sources” as the basis for the report.

D-Wave CEO Vern Brownell also says that the company is contemplating a large round of funding next year, and that an IPO is unlikely in the near future.

Last week, at D-Wave’s inaugural users group conference in Santa Fe, New Mexico, the company announced its next-generation system, using a 2000-qubit processor, effectively doubling the number of qubits capacity of the previous generation D-Wave 2X system, which the company sold to Google and NASA in 2013 for $15 million.

The company claims that their new 2000-qubit system has yielded performance improvements up to 1,000 times compared to the D-Wave 2X in early tests.

The New Mexico conference featured speakers from Los Alamos National Laboratory, NASA, Lockheed Martin, the Roswell Park Cancer Center, Oak Ridge National Laboratory, USC and D-Wave, as well as a number of quantum software and services companies.

“As the only company to have developed and commercialized a scalable quantum computer, we’re continuing our record of rapid increases in the power of our systems, now up to 2000 qubits.  Our growing user base provides real world experience that helps us design features and capabilities that provide quantifiable benefits,” said Jeremy Hilton, senior vice president, Systems at D-Wave. “A good example of this is giving users the ability to tune the quantum algorithm to improve application performance.”

D-Wave has never made a sale in Canada, but has sold systems to Lockheed Martin Corp. and the Los Alamos National Laboratory, with an eye on a European sale in the near future.

Last October, at the StableView Asset Management TECH15 conference in Toronto, D-Wave president and CEO Bo Ewald asked a room full of Bay Street investors, “If you knew back in the 1950s that there was a company called International Business Machines manufacturing vacuum tubes and computer processors, would you have invested in them?”

D-Wave’s computer employs a quantum annealing technique, which achieves quantum-like effects but is not technically a quantum computer, which most scientists believe to be an impossible achievement.

Indeed, while there has been a lot of back and forth between D-Wave and a skeptical scientific community, The Verge reports that not only has the company never proved that its processor demonstrates quantum effects compared with a normal computer, but that “using the company’s current methodologies, it never will.”

“Just because [their chips] are quantum, that doesn’t make them a quantum computer,” said Greg Kuperberg of UC Davis to The Verge. “That’s like saying that any invention that is influenced by air must be an airplane. Of course, it’s not true; it might instead be bagpipes.”

One of Silcoff’s sources, a “PSP spokeswoman”, said that the pension manager “does not currently pursue any strategy dedicated to investments in startup companies” and only “sometimes invest[s] in these companies on a very opportunistic basis,” before declining to comment further.

Founded in 1999, D-Wave has raised over C$200 million from a wide range of high-profile investors, including Bezos Expeditions, run by Amazon founder Jeff Bezos, Goldman Sachs, Growthworks, U.S. venture capital firm Draper Fisher Jurvetson, Harris & Harris Group, the Central Intelligence Agency’s venture capital arm, In-Q-Tel, International Investment and Underwriting, Kensington Partners Limited, and BDC Capital.